Faced with international pressure and with a looming humanitarian and political crisis in the Palestinian territories, sources say, the Bush administration appears poised to accept a decision by European nations to cover all or some of the Palestinian government's payroll. But Israel's ambassador to Washington, Daniel Ayalon, was quoted Wednesday as saying that Jerusalem would oppose any international plan to cover salaries.

Jewish communal leaders, speaking on condition of anonymity Wednesday, said that it is not yet clear whether they would wage a serious fight to block the E.U. plan. Already, though, a legislative fight has broken out over a bill — the Palestinian Anti-Terrorism Act of 2006 — aimed at blocking the White House's ability to offer financial assistance to the Hamas-led Palestinian Authority or maintain diplomatic contacts with it."